Former city manager's pension payments focus of dispute

TEMECULA  When former city manager Shawn Nelson left City Hall at the end of 2011 after 21 years as a city employee, he had accumulated around 2 1/2 years in leave. According to the terms of his employment contract, Nelson would stay on the city payroll until March 2014 to pay off that leave, which includes sick time, vacation hours and a year of "seniority pay."

So for the last 13 months, Nelson has collected a paycheck of $11,214 every two weeks and the city has continued to make contributions toward his retirement account with the California Public Employees’ Retirement System, according to the city's finance team.

Those payments to CalPERS were called into question by his successor, Bob Johnson, shortly before Johnson was fired.

On Nov. 13, the same day that Johnson was placed on administrative leave by the City Council after a closed-session council meeting, the city received an email from CalPERS that said Nelson's "seniority pay" was considered final settlement pay, which meant the city was not obligated to continue paying his CalPERS premiums and could recover a percentage of the payments that had been made.

In addition, the decision meant Nelson's leave would not be counted toward the years of service that could be plugged into the formula that determines his final pension amount, which will end up being well more than $100,000 a year regardless of how CalPERS eventually rules.

Before he announced his retirement, Nelson was one of the highest-paid city managers in the state with a salary and benefits package that topped $330,000 a year, according to a salary survey conducted by the California League of Cities.

His pension will be determined by his years of service, multiplied by 2.7 percent of his highest year of compensation.

CalPERS could not immediately provide information on what Nelson's pension would be with, and without, the leave credited toward his years of service.

"When we caught the payroll reporting error, the city had already paid over $75,000 towards Shawn’s annual $90,000 'premium' to CalPERS for Shawn’s reported service credit. CalPERS indicated that the maximum amount that the city might be able to recover from that error could be 6 months worth of premiums,” Johnson said in an email to The U-T Californian.

Genie Wilson, former chief financial officer, and Johnson, who said Wednesday the matter was unresolved when he left, were fired shortly after they were placed on leave, a decision that the city attributed to a difference in managerial philosophy.

Johnson was installed as manager on Jan. 1, 2012, taking over the city's reins that had been held by Nelson for more than 10 years.

Adams said this week in an email to The U-T Californian that the city is aware of the dispute on the payments and is expecting to hear from CalPERS in the very near future with a formal determination letter.

In the Nov. 13 email, Lolita Lueras of CalPERS said the agency does not yet have a retirement application on file for Nelson and when he does submit one his retirement check may be delayed due to what she referred to as "non-reportable compensation in the system."

The city had Los Angeles-based attorney Steve Berliner send CalPERS an email Monday that explained the city's position.

"The city disagrees with your conclusion that the seniority pay is final settlement pay," he wrote. "The payments at issue were his exact pay, no more or less, and therefore equal to his compensation earnable."

In the event that CalPERS already has made a determination on the matter, Berliner said his email should be considered the city's appeal of that determination.

Temecula Mayor Mike Naggar said that it's his understanding the leave should be counted toward Nelson's time of service just as two weeks taken for a vacation wouldn't count against the years of service for an employee.

"However, this determination will ultimately be made by CalPERS," he added.

Nelson, who is being considered for a consultant position in Menifee, said Wednesday that he has no plans to appeal CalPERS' decision on the matter if the agency determines the leave doesn't count toward his Temecula service time.

"I want to be fully in compliance with what CalPERS says," he said, adding that he knew going in that a city manager position was "24/7."